Coal seam gas must be tapped

Just a couple of days after voting the carbon tax package into law, the Greens began to push for Australia to move to 100 per cent renewable energy within a decade. “We have the ability, we simply lack the political will,’’ claimed Greens Senator Christine Milne. This contradicts the fundamental thrust of the carbon tax package which was aimed at improving the economics of gas-fired power over coal so that Australia could more quickly shift its main source of electricity generation to gas, which produces 70 per cent less greenhouse gas emissions than coal.

Under a carbon tax, Treasury estimates that gas-fired electricity generation will grow from about 18 per cent of total generation in 2011 to 40 per cent to 45 per cent in 2050 (including carbon capture and storage), while renewable energy, now less than 10 per cent of electricity generation, is expected to increase to between 40 per cent and 50 per cent by 2050.

The Greens’ strategy to decarbonise the economy is at odds with our biggest ever investment boom in fossil fuels, including in the liquefied natural gas (LNG) industry. Accessing the nation’s generally high-grade coal seam gas (CSG) and exporting it as LNG could turn Australia into a gas superpower. In the past 18 months alone it has become apparent gas will become a much bigger source of energy and exports than previously understood. This offends the Greens, who don’t consider gas a “clean” energy and believe that even though they voted for the market mechanism of a price on carbon, they should be able to determine Australia’s energy mix.

The threat that CSG could stymie their vision of a decarbonised economy has seen the Greens rallying grassroots and political opposition. They have found allies in farming communities who are upset by mining companies demanding access to explore and sink gas wells on their land. Concern about the pollution of aquifers and ground water has generated a backlash among farmers. An odd alliance of broadcaster Alan Jones, farmers and environmental activists has urged farmers to deny access to their land. The issue is building and is expected to feature in Queensland’s election campaign.

While the Crown owns resources and can grant exploration licences, and under state laws land owners cannot obstruct oil and gas companies coming onto their land without a reasonable excuse, miners are nevertheless required to negotiate land access agreements with landholders. Although it’s a state issue, the federal government has been dragged into it as it has the power to legislate over environmentally significant water assets.

But while the environmental and land use questions surrounding CSG are legitimate, the approval processes are rigorous. The Queensland Curtis LNG Project assessment took more than two years, involved more than 4000 meetings, briefings and presentations and resulted in a 12,000-page report. The state government imposed 1200 conditions while the federal government imposed an additional 300.

Queensland has dealt with concern over prime farming land by quarantining “strategic cropping land” from any mining development and blocking exploration within 2 kilometres of towns of a population of 1000. The NSW government has promised to release a strategic land-use policy, which is also likely to limit mining in highly productive farming areas.

Federal Resources Minister Martin Ferguson is right to put the onus on state governments and industry to ensure community confidence in the safety and environmental integrity of CSG operations. He is working with states and territories on harmonised rules relating to hydraulic fracturing, the controversial practice used to extract the gas from rock, and the use of chemicals and water management, though the commonwealth isn’t seeking to legislate over any of this.

And as the Weekend Financial Review reported, CSG is welcomed in many rural communities as it is transforming their once stagnant economies with jobs, investment and demand for local businesses. Queensland CSG development has been in progress for a decade already and through it the state derives 80 per cent of its gas needs. CSG now supplies one-third of the eastern Australia domestic gas market. At least $70 billion worth of investments are planned, with about $20 billion of CSG projects earmarked in NSW. Gas exports are forecast to more than double by 2016, and may reach equal footing as an export earner with iron ore and coal, a Reserve Bank of Australia study shows. Australia could become the second largest LNG supplier globally during the next decade.

The environmental benefits are undeniable. As Origin Energy chief executive Grant King has pointed out, switching from coal to gas for power generation will deliver the cuts in greenhouse gases, and the by-product emissions are negligible.

So as we become an energy superpower through LNG exports we will not only lift the living standards in the Asia- Pacific region, but also reduce growth in carbon emissions. There will always be conflict over resources whenever one sector of the economy booms. But CSG development is in Australia’s interests. The Greens’ campaign against it is a cynical political exercise aimed at limiting our national wealth.